so my opponent had azurefate with the ruby gem and reese in play. He produced a bunch of robots and then re produced pterobot. Pterobot costs was 1 but it was inspired. So..is this even a bug or is this working as intended (in which case its quite confusing).

I think this is working as intended, because as far as I know, the Pterobot only has its costs reduced while it actually exists in .
This would mean that until it is actually in play it's a cost 7, and so is inspired before lowering its cost.

Because it already exists in your hand. This is just the order of operations coming into play, TCGs with rulebooks would have a timing explanation for when different things trigger.

But basically, the card is being put into play and created at the same time. So the comes into play part is triggering Azurefate Sorceress BEFORE Pterobot's own cost reduction text can trigger. The reason Pterobot cannot trigger before Azurefate sees him is because at no point does he exist to do so. The instant he exists, the instant his cost reducing text can possibly trigger, is the same instant where Azurefate Sorceress spots him entering play.

It's a static effect in terms of gameplay. Yet it's a trigger, like most game mechanics, in the programming sense. It is activated when you play a dwarf or robot, modifying its cost from wherever it is in the deck.

The cards will always trigger their interactions between each other. The only thing that varies is in what order they do so.

The Pterobot was inspired because it has 'cost -1 in all YOUR zones', but the chain and in play are not your zones, they are shared zones. So when Pterobot hits the board it has it's static cost without any reduction from the power.

The Pterobot was inspired because it has 'cost -1 in all YOUR zones', but the chain and in play are not your zones, they are shared zones. So when Pterobot hits the board it has it's static cost without any reduction from the power.